Free-lunch egalitarianism

At the beginning of his presidency, Barack Obama argued that the country’s spiraling debt was largely the result of exploding health-care costs. That was true. He then said the cure for these exploding costs would be his health-care reform. That was not true.

It was obvious at the time that it could never be true. If government gives health insurance to 33 million uninsured, that costs. Costs a lot. There is no free lunch.

Now we know. The Congressional Budget Office’s latest estimate is that Obamacare will add $1.76 trillion in federal expenditures through 2022. And, as one of the Medicare trustees has just made clear, if you don’t double count the $575 billion set aside for the Medicare trust fund, Obamacare adds to the already crushing national debt.

Three years later, we are back to smoke and mirrors. This time it’s not health care but the Buffett Rule, which would impose a minimum 30 percent effective tax rate on millionaires. Here is how Obama introduced it last September:

“Warren Buffett’s secretary shouldn’t pay a [higher] tax rate than Warren Buffett. . . . And that basic principle of fairness, if applied to our tax code, could raise enough money” to “stabilize our debt and deficits for the next decade. . . . This is not politics; this is math.”

Okay. Let’s do the math. The Joint Committee on Taxation estimates this new tax would yield between $4 billion and $5 billion a year. If we collect the Buffett tax for the next 250 years — a span longer than the life of this republic — it would not cover the Obama deficit for 2011 alone.

As an approach to our mountain of debt, the Buffett Rule is a farce. And yet Obama repeated the ridiculous claim again this week. “It will help us close our deficit.” Does he really think we’re that stupid?

Hence the fallback: The Buffett Rule is a first step in tax reform. On the contrary. It’s a substitute for tax reform, an evasion of tax reform. In three years, Obama hasn’t touched tax (or, for that matter, entitlement) reform, and clearly has no intention to. The Buffett Rule is nothing but a form of redistributionism that has vanishingly little to do with debt reduction and everything to do with reelection.

As such, it’s clever. It deftly channels the sentiment underlying Occupy Wall Street (original version, before its slovenly, whiny, aggressive weirdness made it politically toxic). It perfectly pits the 99 percent against the 1 percent. Indeed, it is OWS translated into legislation, something the actual occupiers never had the wit to come up with.

Clever politics, but in terms of economics, it’s worse than useless. It’s counterproductive. The reason Buffett and Mitt Romney pay roughly 15 percent in taxes is that their income is principally capital gains. The Buffett Rule is, in fact, a disguised tax hike on capital gains. But Obama prefers to present it as just an alternative minimum tax because 50 years of economic history show that raising the capital gains tax backfires: It reduces federal revenue, while lowering the tax raises revenue.

No matter. Obama had famously said in 2008 that even if that’s the case, he’d still raise the capital gains tax — for the sake of fairness.

For Obama, fairness is the supreme social value. And fairness is what he is running on — although he is not prepared to come clean on its price. Or even acknowledge that there is a price. Instead, Obama throws in a free economic lunch for all. “This is not just about fairness,” he insisted on Wednesday. “This is also about growth.”

Growth? The United States has the highest corporate tax rate in the industrialized world. Now, in the middle of a historically weak recovery, Obama wants to raise our capital gains tax to the fourth highest. No better way to discourage investment — and the jobs and growth that come with it. (Except, perhaps, for hyperregulation. But Obama is working on that too.)

The Buffett Rule redistributes deck chairs on the Titanic, ostensibly to make more available for those in steerage. Nice idea, but the iceberg cometh. The enterprise is an exercise in misdirection — a distraction not just from Obama’s dismal record on growth and unemployment but, more important, from his dereliction of duty in failing to this day to address the utterly predictable and de

Actually, the gimmick was apparent even without the president’s acknowledgment. He gave his remarks in a room in the White House complex adorned with campaign-style photos of his factory tours. On stage with him were eight props: four millionaires, each paired with a middle-class assistant. The octet smiled and nodded so much as Obama made his case that it appeared the president was sharing the stage with eight bobbleheads.

And if that’s not enough evidence of gimmickry, after his speech Obama’s reelection campaign unveiled an online tax calculator “to see how your tax rate stacks up against Mitt Romney’s — and then see what the Buffett Rule would do.”

Obama argued that his plan to make sure that those earning north of $1 million a year don’t pay a lower tax rate than average Americans — although gimmicky and insufficient — is an advance. “The notion that it doesn’t solve the entire problem doesn’t mean that we shouldn’t do it at all,” he explained.

That’s true, to a point. But Obama’s claim that the Buffett Rule “is something that will get us moving in the right direction toward fairness” would be more convincing if he took other steps in that direction, too.

Three years into his presidency, Obama has not introduced a plan for comprehensive tax reform — arguably the most important vehicle for fixing the nation’s finances and boosting long-term economic growth. His opponents haven’t done much better, but that doesn’t excuse the president’s failures: appointing the Simpson-Bowles commission and then disregarding its findings, offering a plan for business tax reform only, and issuing a series of platitudes. The Buffett Rule, rather than overhauling the tax code, would simply add another layer.

A search of the White House Web site yields 17,400 mentions of the Buffett Rule — a proposal that would bring in $47 billion over 10 years, much of that from 22,000 wealthy households. By contrast, the alternative minimum tax gets fewer than 600 mentions on the site. The AMT, if not changed, will take about $1 trillion over a decade from millions of taxpayers, many of whom earn less than $200,000 a year.

Obama’s prioritization is no mystery: The populist Buffett Rule polls well. This explains its inclusion in countless presidential speeches and statements. White House reporters, tiring of the theme, have proposed a Jimmy Buffett Rule (three-drink minimum) and a Buffet Rule (Newt Gingrich would be an obvious candidate).

The politics of the Buffett Rule — it has no chance of passing when the Senate takes it up next week — are so overt that Obama’s remarks Wednesday were virtually indistinguishable from a section of his campaign speech in Florida on Tuesday.

Wednesday: “If we’re going to keep giving somebody like me or some of the people in this room tax breaks that we don’t need and we can’t afford, then one of two things happens: Either you’ve got to borrow more money to pay down a deeper deficit, or . . . you’ve got to tell seniors to pay a little bit more for their Medicare. You’ve got to tell the college student, ‘We’re going to have to charge you higher interest rates on your student loan.’ . . . That’s not right.”

Parts of Obama’s “official” speech will no doubt be repeated on the stump, including the points that “we just need some of the Republican politicians here in Washington to get on board with where the country is,” that Obama cut taxes 17 times (the bobbleheads nodded in agreement), and the contention that Republicans today would view Ronald Reagan as a “wild-eyed, socialist, tax-hiking class warrior.”

Nothing is inherently wrong with campaign-style rhetoric from the White House; George W. Bush used it repeatedly to pass his tax cuts and in his attempt at a Social Security overhaul. The pity is that Obama doesn’t use his unrivaled political skill to sell a tax plan of more consequence — and less gimmickry.

ITS A SPENDING PROBLEM, IDIOT!

“There are others who are saying: ‘Well, this is just a gimmick. Just taxing millionaires and billionaires, just imposing the Buffett Rule, won’t do enough to close the deficit,’ ” Obama declared Wednesday. “Well, I agree.”

Actually, the gimmick was apparent even without the president’s acknowledgment. He gave his remarks in a room in the White House complex adorned with campaign-style photos of his factory tours. On stage with him were eight props: four millionaires, each paired with a middle-class assistant. The octet smiled and nodded so much as Obama made his case that it appeared the president was sharing the stage with eight bobbleheads.

Although I have great admiration for him as a human being, having overcome obstacles that would've condemned a lesser man to helplessness and insanity, and although he has become more conservative as he's grown older and observed more, I don't consider Krauthammer a hard core conservative.

After all, he once was a speechwriter for Mondale. He's still an enormously talented writer and one of the people I admired most in the world. Even when he disagrees with me, he makes sense and I have to reevaluate my own thinking.

The tax system as a whole has to be changed so the super-rich and corporations can't shirk their tax responsibilities. The Buffett Rule simply brings to people's attention the unfairness of our tax system. He could also push a GE Rule which says corporations can't pay negative taxes.

Not sure how accurate it was but heard tonight on the Jim Bohanon radio show an Economist saying that this Buffet rule is total BS and if you took ALL the money from those making over a million /yr it would run Obama's govt for 18 min. I know numbers can be played with but anyway you cut it all this yapping about taxing the evil rich does NOTHING to the deficit or the debt and he is doing NOTHING about it and hasn't for 3+ years.

ITS A SPENDING PROBLEM!!!

Not sure how accurate it was but heard tonight on the Jim Bohanon radio show an Economist saying that this Buffet rule is total BS and if you took ALL the money from those making over a million /yr it would run Obama's govt for 18 min. I know numbers can be played with but anyway you cut it all this yapping about taxing the evil rich does NOTHING to the deficit or the debt and he is doing NOTHING about it and hasn't for 3+ years.

ITS A SPENDING PROBLEM!!!

He repassed the Bush tax cuts. His deal he got out of that was more tax cuts. Almost 40% of his stimulus plan was tax cuts. The problem with cutting spending is that what everyone wants to cut amounts to 12% of total spending. Other than that you have defense which everyone wants to increase; Medicare and Social Security which are too popular to cut. Obama has been criticized by conservatives for cutting spending on Medicare, NASA, defense, Social Security COLA cuts, and home heating assistance. If you take all that off the table there's almost nothing left.

I think all reasonable people agree that SOMETHING has to be done on Entitlements before those things are not even there anymore. No one is touching them except Paul Ryan bravely willing to at least get something started. But instead of working on it, the Democrats led by this clown would rather just make him out to be satan willing to throw old people off cliffs.

I'm no expert on all this, thats why we send supposedly smart people to DC to lead and fix these things, instead they make them worse and its all gonna blow up in our faces soon.....see Greece and the reast of Europe. Theres enough waste to at least get somewhere before calling for money into the black hole of this Govt. Good reading is Sen Tom Coburn's research into govt waste. Problem is ....whats being done about it. He says theres about 200-300 billion that could be saved without much pain at all....and how about doing something called " zero budgeting " ( I think ) where instead of the usual giving all Govt dept's auto increases of 5-10% per year they go dept by dept for whats really needed.

Until they get spending under SANE control, stop asking for more money!! From any of us, except all pay what they owe.

(CNSNews.com) – Taxing millionaires and billionaires more – a position advocated by billionaire Warren Buffett and President Barack Obama – won’t make much of a dent in the national debt or the record federal budget deficits, a new study finds.

“Even taking every last penny from every individual making more than $10 million per year would only reduce the nation's deficit by 12 percent and the debt by 2 percent,” the non-partisan Tax Foundation’s David Logan writes.

“There's simply not enough wealth in the community of the rich to erase this country's problems by waving some magic tax wand,” said Logan.

Buffett, in an August 15 op-ed in the New York Times said it was time to stop “coddling” the wealthy and called on Congress to raise taxes on those making $1 million or more.

“But for those making more than $1 million there were 236,883 such households in 2009 I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more there were 8,274 in 2009 I would suggest an additional increase in rate,” Buffett wrote.

“My friends and I have been coddled long enough by a billionaire-friendly Congress,” wrote Buffett.

However, according to the Tax Foundation study written by Logan, even taxing the nation’s millionaires at 50 percent – even eliminating loopholes and deductions – would only reduce the deficit by 8 percent and the national debt by 1 percent.

“[T]aking half of the yearly income from every person making between one and ten million dollars would only decrease the nation's debt by 1%,” the report said.

U.S. currency

Taxing millionaires at an effective tax rate of 50 percent would raise only $120 billion more, according to Tax Foundation calculations based on IRS data.

Taxing those who make $10 million or more at an even higher rate, as Buffett advised, would also do little to reduce the deficit and debt. Tax Foundation calculations indicate that taxing these individuals at an effective rate of 100 percent would only net the government $186 billion, reducing the deficit by 12 percent and the debt by an additional 2 percent.

In fact, the only way for the government to solve its fiscal issues with revenue would be to confiscate every single dollar from every single American making $200,000 or more per year, the study said.

“Finally, to put everything in perspective, think about what would need to be done to erase the federal deficit this year: After everyone making more than $200,000/year has paid taxes, the IRS would need to take every single penny of disposable income they have left. Such an act would raise approximately $1.53 trillion,” reported the Tax Foundation.